Amazon Stock Breaks Out On Insatiable AI Demand; Rush to Update iPhones Lifts Apple; Sentiment Back To Extremely Positive

Author: The Arora Report | October 31, 2025 11:38am

Insatiable AI Demand

Please click here for an enlarged chart of Amazon.com, Inc. (NASDAQ:AMZN).

Note the following:

• This article is about the big picture, not an individual stock.  The chart of AMZN stock is being used to illustrate the point.
• The chart shows the gap up in AMZN stock after earnings.
• The chart shows AMZN stock has technically broken out.
• The chart shows zone 1.  This was previously a resistance zone and has now turned into a support zone.
• RSI on the chart shows AMZN stock is very overbought.  Overbought stocks are susceptible to a pullback.
• Amazon had been losing market share to Microsoft’s Azure and Google Cloud.  All of that has gone by the wayside because the demand for AI compute is insatiable.  The numbers from Amazon earnings tell a story:
  • Adjusted earnings came at $1.95 per share vs. $1.57 consensus.
  • Revenue came at $180.2B vs. $177.9B consensus.
  • AWS revenue came at $33B vs. $32.5B consensus.
  • Q4 revenue projections came at $206B – $213B vs. $208.4B consensus.
  • Amazon customers want to run their AI workloads in AWS.
  • Amazon is advancing its AWS AI infrastructure for agent creation and deployment.
  • Amazon is expanding its AI compute cluster from 500K Trainium 2 chips to over 1M by the end of the year.
  • Trainium 3 will allow Amazon to supply more customers with AI compute.
• Based on the Amazon earnings and conference call, there is a new trade around position signal from us. 
• Consumers are rushing to update their iPhones.  This has led to the best quarter ever for Apple Inc (NASDAQ:AAPL).  Apple is projecting a blockbuster holiday season.
• Based on our sentiment analysis, after staying in the extreme positive zone for a long time, yesterday the sentiment moved up to the very positive zone.  The trigger was earnings from Meta Platforms Inc (NASDAQ:META) and Microsoft Corp (NASDAQ:MSFT).  Earnings from Amazon and AAPL have triggered a move in sentiment back to the extreme positive zone this morning.
• Barring any unexpected news, there is a very high probability of sentiment moving higher in the extreme positive zone.  If such a move occurs in sentiment, it has the potential to cause a melt up in the stock market.

Venezuela

The probability is increasing that the U.S. may directly attack military installations inside Venezuela.  Venezuela is a major oil producer.  If such an attack occurs and the stock market dips, the dip will likely be a buying opportunity.  The reason is that a potential regime change in Venezuela will be a long term positive for the U.S. stock market.  

China

Prudent investors should note that exporters in China are speculating the U.S. China trade truce will not last.  The belief in China is that China got the upper hand over the U.S. in the agreement.

Even though the stock market is celebrating the truce with China, prudent investors should be aware that long term risks with China remain.  

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks.  For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis.

In the early trade, money flows are positive in Amazon (AMZN), NVIDIA Corp (NASDAQ:NVDA), Microsoft (MSFT), Alphabet Inc Class C (NASDAQ:GOOG), Meta (META), Tesla Inc (NASDAQ:TSLA), and Apple (AAPL).

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ.  Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.  The most popular ETF for gold is SPDR Gold Trust (GLD).  The most popular ETF for silver is iShares Silver Trust (SLV).  The most popular ETF for oil is United States Oil ETF (USO).

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound.

What To Do Now

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

A protection band of 0% would be very bullish and would indicate full investment with 0% in cash.  A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less.  Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

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